Honestly, I'd look at the 4-drive NAS boxes. It's the 'optimal' for space vs. data security. With a 2-drive, you've got either RAID1 or RAID0... the space of one HDD, or total data loss in the event of drive death...

I've had a Synology DS411j for some time now (about 18 months, I think; the last year has been a bit hectic) and it's doing grand. I am, in fact, debating getting a DS413j to act as a pure media server for family. Running Synology's take on RAID5, transfer speeds are pretty good (in both directions) although Window's stubborn insistence in forgetting the NAS password every is annoying. Linux remembers it, though, which means XBMC is OK.

I like the idea of the upgradability of a custom built NAS running FreeNAS or similar, but using 'old' kit is going to mean it draws tons of electricity, and buying new low-power kit means it'll cost a fortune.

I'd like to look at RAID-5 (eventually) but I realise that I will have to start with RAID-1 to begin with.

So,

1. When you set it up a NAS can you start with RAID-1, then reconfigure to RAID-5 at a later date ?
(Once I get more drives in the in the future without having to copy the data off, reconfigure to RAID-5
then copy the data back again ?)

2. File system format - Do they matter NTFS or EXT4
I'd like to be able to share and stream my files with my PCs (dual booting Win 7 and Linux,
Raspberry Pi and with my iPhone).
I very rarely boot into Win 7 though.

Yes you can, but it's a bit of a faff. Basically, you fail one of the drives in the RAID1 array and remove it from the array. Then you create a degraded RAID5 array with that drive and the new one and copy the data over. Finally, you destroy the RAID1 array and add its drive to the RAID5 array and let it rebuild.

As for filesystems, if you are running Linux on the NAS, why use anything but a Linux filesystem? I'd be tempted to use ZFS on a NAS, but ext4 would be fine. Bear in mind that only the NAS itself reads the filesystem, cliets use either NFS or CIFS and neither know nor care about the on-disk format.

"Insanity: doing the same thing over and over again and expecting different results." (Albert Einstein)